Money talks. As Parliament resumes, the mutter of fractious philanthropists and disgruntled grannies illustrates David Cameron’s dilemma. His government of the rich, as it is perceived, has contrived to alienate the wealthiest while offering little to those on modest means. The PM’s new-found knack of displeasing most of the people for most of the time has put the Tories at their lowest ebb since taking office.

Meanwhile, Labour has established a solid poll lead, Ed Balls is poised to carry on shredding George Osborne’s collapsing Budget, and the whiff of government incompetence grows more pungent. Emboldened by the Tories’ misfortunes, Mr Miliband has come up with a plan to replace plutocratic funders with piggy-bank politics.

His scheme for a ban on big union donations and a £5,000 annual cap on any gifts to party coffers may be opportunistic, since the Tories would stand to lose three times as much from such a limit. Mr Miliband’s plan, however, concerns more than cash. Despite being unfairly caricatured as the creature of TUC paymasters, he has had an unusually fraught relationship with the union barons.

The problems came to a head last January when Mr Balls gave a speech supporting a public sector pay freeze and saying that Labour would not promise to reverse any Tory spending cuts. Len McCluskey, the leader of Unite, issued a doom-laden response, predicting that Mr Miliband would one day face a coup by the Labour Right. As Mr McCluskey put it: “That way lies the destruction of the Labour Party as well as general election defeat.”

Anyone who thinks the curse of McCluskey a trifling matter should study the provisional agenda for Unite’s summer conference, which includes motions calling for a 10 per cent reduction in contributions to Labour, in order to bolster its strike fund. That amount would be docked from the £3 yearly levy paid by each member who does not opt out – one arrangement that Mr Miliband does not propose to change.

Mr Miliband can ill afford a war with Unite, whose £2.5 million contribution in the past 12 months makes it Labour’s largest financial supporter. My interview with Tom Watson, to be published this week in Fabian Review, suggests how great the tensions have become. Mr Watson, Labour’s election co-ordinator and the party’s deputy chairman, was persuaded to take on his powerful role by Mr Miliband, whom he describes, along with Mr Balls, as a “friend”. But Mr Watson is also friends with Mr McCluskey, his former flatmate, about whom he has previously spoken in the warmest terms, citing the union leader’s fondness for W B Yeats and the Kings of Leon. The two Eds, it seems, may not figure highly in Len’s pantheon of icons.

In his Fabian interview, Mr Watson told me that, while he agrees with Mr Balls’s message, it was “wrong not to signal adequately what we were doing and the timing of doing it. We owe it to [the unions] to disagree respectfully with them, rather than to throw it on their doorstep in the Sunday paper.” That rebuke to the Labour leadership may indicate Mr McCluskey’s fury.

Perhaps wishing to mend fences, Mr Miliband maintained what I am told was a “good engagement” with TUC leaders in keeping them appraised of his long-held wish to shake up donations and persuading them of the “logic” of a move designed both to discomfit the Tories and shore up Labour’s historic links with the unions. In addition, Mr Miliband hoped, over-optimistically, to dissipate the contempt that voters feel for politicians in general.

It is time, as he rightly says, to end the idea that party leaders are in thrall only to those who can pay. Whether removing “big money” would be enough to make politics in general, and Labour in particular, more attractive is less certain.

Some senior party figures seem curiously deflated. “It doesn’t feel as if we’ve been ahead by 10 points,” says one, while others are baling out. The zero-sum battle in which three antagonists, Liam Byrne included, try to become mayor of Birmingham may prefigure a trend in which those pursuing power decide that it does not lie in a Labour victory in 2015.

For months, doubters have been saying that Labour’s best hope is to become the largest party. That would make Mr Miliband, still seen by some as an accidental leader after his narrow win, an accidental prime minister anointed despite voter apathy. That analysis may not be right or fair. Mr Miliband, who never had a political honeymoon, has surprised his critics and disproved those who mistakenly viewed him as not being up to the job.

Even so, Mr Cameron’s moment of maximum danger is also Mr Miliband’s. Disastrous as Mr Osborne’s Budget may be, some of his proposals are by no means as dreadful as they are being depicted. Labour’s objection to the charity tax, which the party hopes to force a vote on, has been artfully tied to the unwise reduction of the 50p rate, under which “millionaires pay less and millions pay more”.

That context avoids awkward questions about whether the party should seem to favour the super-rich paying limitless tax-free sums to pet causes. Similarly, Labour’s granny tax debate on Thursday will skirt round the issue of why the affluent elderly should not contribute a little more towards the vast costs of an ageing population.

Mr Miliband, like Mr Cameron, risks too narrow a focus on the spreadsheet society in which every debate is defined by money except for the one, vital topic of where exactly Britain is going now that the cash has run out. The Tories have a story, however inchoate, of a pared-down state in part supplanted by charity. While a second Elizabethan Poor Law is hardly appealing, Labour so far lacks a counter-plan for the fiscal cataclysm to come.

Mr Osborne has one remaining elephant trap, in the form of a spending review in this Parliament. Ed Balls, who persuaded Tony Blair to sign up to the Tory spending cuts, may yet find himself with little alternative but to endorse a programme that dwarfs the strictures of 1997. For all the pain, this remains a golden age of public services. Schools are often good, law and order prevails, and the trauma ward where I visited a dying relative at the weekend offers miracles to the curable and peace to those whose lives are running out. Maintaining such standards will demand political courage and an imagination missing from Britain’s sideshow politics.

Those around Mr Miliband say rejecting union donations is the first sign that his period of caution is over. “He has got the bit between his teeth,” says one aide, promising a shift in tempo and a clear outline of what Labour’s promise of change will entail. While Labour is right to want to take big money out of electioneering, the real cash flow problem concerns the dwindling public coffers. All other rows are the small change of politics.

Mr Miliband has proved a bolder and better opponent than some, Mr McCluskey included, thought possible. To be electable, he must also quickly prove himself a better innovator. Time, like money, is trickling away.